Goffer Prosecutors, Defense Team Rest as Case Nears Closing

May 31 (Bloomberg) -- Prosecutors rested their insider-trading case against ex-Galleon Group LLC trader Zvi Goffer, his
brother Emanuel, and accused accomplice Michael Kimelman as the
traders offered evidence that they didn’t trade on illegal tips.

Less than two weeks after opening their case against the
three men, prosecutors today told the judge and jury in
Manhattan federal court that they had no more evidence to
present. Five hours later, lawyers for the accused ended their
cases as well. Closing arguments will begin tomorrow, and jurors
may be deliberating by June 2, the judge said.

Before resting, a lawyer for Emanuel Goffer played for
jurors a recording of a conversation between the Goffer brothers
that was wiretapped by the government on Jan. 6, 2008. In it,
the two discuss whether to hire a trader for their firm,
Incremental Capital LLC, which Zvi Goffer founded with his
brother and Kimelman after being fired from Galleon.

“He’s gonna be consulting with other, with companies like
small cap,” Emanuel Goffer said on the recording. “I think
that the rule that would be is, no one just allowed to trade the
stocks that he’s consulting for.”

“Or you could, you could trade the stocks, but not ahead
of an announcement,” Zvi Goffer replied.

Illegal Tips

The three defendants are accused of trading on illegal tips
that came from attorneys then working at the Ropes & Gray LLP
law firm. The tips were about transactions involving 3Com Corp.
and other stocks, according to prosecutors.

Goffer’s ex-boss, Raj Rajaratnam, was found guilty May 11
of insider trading. He faces as long as 19 1/2 years in prison
when he’s sentenced on July 29. Prosecutors previously said that
Goffer passed inside information to another Galleon trader to
impress the hedge fund’s managers.

The Goffer brothers’ conversation, which defense lawyers
say was presented to show that two didn’t trade on illegal tips,
followed testimony from an agent for the Federal Bureau of
Investigation, Jan Trigg, who was recalled to the witness stand
by Kimelman.

Under questioning from Michael Sommer, a lawyer for
Kimelman, Trigg testified that Kimelman didn’t use a prepaid
cell phone, as others in the alleged scheme had done, and that
Kimelman didn’t work with Zvi Goffer in 2007.

Trader’s Leak

The agent testified that the FBI never recorded Kimelman
and Zvi Goffer sharing illegal information and that Zvi Goffer
didn’t telephone Kimelman after he got a leak from another
trader.

Sommer also sought to show that Kimelman didn’t trade in
3Com at the same time as others who are accused of insider
trading or have pleaded guilty to doing so. Kimelman sold shares
of 3Com on Sept. 28, 2007, about 90 minutes before the maker of
computer-networking equipment announced that it would be
acquired by Bain Capital LLC, Trigg testified after being shown
records by the defense.

“He put in an order to sell, yes,” Trigg said as Sommer
asked questions suggesting that such a stock sale would be
inconsistent with insider trading.

The case is U.S. v. Goffer, 10-cr-00056, U.S. District
Court, Southern District of New York (Manhattan).